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Indo-U.S. altercations jolt Indian banks entry into U.S.
By agencies
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Friday, 18 August 2006, 19:30 IST
NEW DELHI: The Indo-US altercation at the World Trade organization (WTO) has shattered plans of ICICI Bank, State Bank of India and Bank of Baroda to open branches in the U.S. Timely clearances of the requests of their proposals are still pending with the Office of Comptroller of the Currency (OCC), Economic Times reports.
Sources reveal that Indias refusal to tow the line at the WTO has offended US authorities so much so that they have put these banks in trouble. The recent cola controversy has just aggravated the situation.
U.S authorities say that the cola row is likely to affect flow of foreign direct investment (FDI). However, sources said that the market areas are more likely to be affected.
The U.S has already cautioned to cancel the generalized scheme of preferences (GSP) benefits that offer duty-free access to certain products in the Indian market. The U.S government has also not shown any interest in clearing the plans of the three banks despite repeated consultations.
Finance Minister, P Chidambaram had lately informed the Parliament that the Federal Reserve follows a restraining procedure in yielding permission to foreign banks for opening branches.
ICICI Banks application has been pending since 2004. The case was taken up with the USTR but the U.S reaction was that the regulators like OCC could not enter into dialogue with other countries on certain applications.
Likewise, SBIs application for setting up a branch at Jackson Heights in New York is pending since May. Bank of Baroda is also awaiting response for the application filed in October 2004.
Foreign banks in the U.S are regulated under the comprehensive consolidated supervision (CCS) structure. The CCS norm reflects a basic global and U.S policy that a banks home country regulator should be chiefly accountable for the banks overall regulation.